Knowledge process outsourcing

Outsourcing of core information-related business activities

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Knowledge process outsourcing (KPO) describes the outsourcing of core information-related business activities[1] which are competitively important or form an integral part of a company's value chain.[2] KPO requires advanced analytical and technical skills as well as a high degree of specialist expertise.[3][4]

Reasons behind KPO include an increase in specialized knowledge and expertise,[1] additional value creation,[3] the potential for cost reductions, and a shortage of skilled labor.[1] KPO is a continuation of business process outsourcing, yet with rather more of business complexity. To be successful in knowledge process outsourcing, a lot of guide is required from interorganizational system.[5]

## Types

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KPO services include all kinds of research and information gathering, e.g., intellectual property research for patent applications; equity research, business and market research, legal and medical services; training, consultancy, and research and development in fields such as pharmaceuticals and biotechnology; and animation and design, etc.[6]

## Importance

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The developing rivalry has brought about shorter time to market cycles, and clients are getting to be more demanding regarding quality. This has constrained the firms to give operational proficiency and increase the value of their products and services. The customer can launch an item quicker and get to the market immediately. A company can lessen the complexities included in overseeing and constantly constructing information in an extensive pool of human resources.[7]

Businesses are constantly in search of reliable KPO service providers who have the ability to drive the best business strategy by analyzing the available data and information in a specific case.

## Risks and benefits

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Benefits[8]

* Cost reduction
* Shortage of skilled employees
* Provides many graduates at very low cost
* High end services are provided at a lower cost to decrease unemployment and benefit their economy
* Provide flexibility in terms of HRM & time management

Risks[8]

* Security- Classified information about the company can be lost
* Key talent retention
* The character of the employee and the quality of the work cannot be assured
* KPO is time consuming and cannot provide a quick fix to the company seeking immediate results.
* Lack of communication between partners due to legal, language and cultural barriers can lead to complications
* Quality of Personnel and Work Cannot Be Guaranteed
* Shortage of Skilled Employees
* Reduction in Communication due to Language barrier
* Inability to protect company's intellect property

## Differentiation from BPO

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A KPO firm requires considerably more skilled personnel than a BPO firm. Experts working in KPO keep on learning and accomplished professionals can power their aptitude to produce more income for the KPO firm.[9] The main difference between a KPO firm and a BPO firm is that in a KPO firm, the customer is included amid the whole execution process.[7]

## Origin of the term

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Ashish Gupta, ex-COO of Evalueserve and co-founder & CEO of Benori Knowledge has often been credited with coining the term. Gupta, an alumnus of the Indian Institute of Technology Delhi, is also a Founder & Trustee of Ashoka University and Plaksha University, and serves on the boards of various companies. Published authors have credited him for coining the term in their works.[10]

## In India

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The Indian National Association of Software and Service Companies (NASSCOM) estimated the total market size of the KPO sector in India in 2006 to be $1.5 billion.[11] The year before, 2005, it had been $1.3 billion, with Evalueserve predicting that by 2010 it would be some $10 to $15 billion.[12] The Indian government was predicting that by 2010 India would have 15% of the global KPO market.[13] However, the 2008 financial crisis, coupled with domestic economic problems such as the IPO of Reliance Power in 2009, caused people to re-evaluate these predictions, incurring worries that India's IT, BPO, and KPO sectors -- which by then, combined, were $8.4 billion in export revenues -- would be greatly affected by these factors.[14] The worldwide KPO industry is expected to reach about US $17 billion by 2015, of which US $12 billion would be outsourced to India. Furthermore, the Indian KPO area is likewise anticipated that it will utilize more than 2, 50,000 KPO experts by 2015.[15]

## In the Philippines

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The Philippines Knowledge Process Outsourcing (KPO) services are often called "non-voice" or back office services, referring to activities outside contact center, customer and IT support services. In 2014, the KPO sector comprised 40 percent of the country's outsourcing industry. The Information Technology and Business Process Outsourcing Association of the Philippines (IBPAP) predicts that the Philippine outsourcing sector will reach $25 billion in revenues and employ about 1.3 million people by 2016.[16]

The KPO industry is different from the BPO in the respect of that the former is more resilient to artificial intelligence (AI) and automation. With the 4th Industrial Revolution, it is estimated that most job losses will occur in low value-added contact center (“voice”) and other BPO services. Other services impacted by AI and automation include medical transcription, basic 2D animation services, parts of IT technical support and back-office transactions.[17] Advanced functions that are projected to become more in demand include analytics and optimization engines, automation enablement, clinical data analytics, remote health management, Virtual Reality (VR)/Augmented Reality (AR)-enabled animation and supply chain optimization.[18]

## See also

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* Outsourcing
* Legal outsourcing
* Recruitment

## References

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1. ^ a b c "The benefits and risks of knowledge process outsourcing". Ivey Business Journal. May–June 2010. Archived from the original on 2012-04-22. Retrieved 2012-03-20.
2. ^ "Sourcing cheaper staff the new groth industry". The Sidney Morning Herald. 2012-01-28. Retrieved 2012-03-20.
3. ^ a b Mierau, Alexander (2007-01-17). "Strategic Importance of Knowledge Process Outsourcing" (PDF). Technical University of Kaiserslautern. Retrieved 2012-03-20.
4. ^ "Now, BPO moves up the value chain". The Economic Times. 2005-08-17. Archived from the original on December 9, 2012. Retrieved 2012-03-20.
5. ^ Ghosh (December 2009). "Knowledge process outsourcing". Acis 2009 Proceedings. Ghosh, Biswadip, ACIS 2009 Proceedings Paper 52.
6. ^ Sornarajah & Wang 2010, p. 280.
7. ^ a b Kaul 2011, p. 150.
8. ^ a b Overby, Stephanie (November 8, 2017). "What is outsourcing? Definitions, best practices, challenges and advice". CIO.
9. ^ "How does KPO differ from BPO" (PDF). Archived from the original (PDF) on 2013-11-27.
10. ^ "HR Practice Scenario in Indian KPOs". Global Business and Management Research: An International Journal. 2009. p. 44.
11. ^ Contractor, Kumar & Kundu 2010, p. 53.
12. ^ Mehrotra 2005, p. 46.
13. ^ Basu 2009, p. 80.
14. ^ Varadarajan 2010, p. 145-146.
15. ^ "SEIS Journal of management" (PDF). p. 86.
16. ^ "SourceFit". 25 August 2015.
17. ^ Lee Kai-Fu (2018), AI Superpowers: China, Silicon Valley and the New World Order
18. ^ IBPAP (2018), “The IT-BPM Industry”

## Sources

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* Basu, Sudip Ranjan (2009). "The economic growth story in India: past, present, and prospects for the future". In Klein, Lawrence Robert (ed.). The making of national economic forecasts. Edward Elgar Publishing. ISBN 978-1-84720-489-9.
* Contractor, Farok J.; Kumar, Vikas; Kundu, Sumit K. (2010). Global Outsourcing and Offshoring: An Integrated Approach to Theory and Corporate Strategy. Cambridge University Press. ISBN 978-0-521-19353-5.
* Kaul, Vijay Kumar (2011). Business Organization and Management: Text and Cases. Pearson India. ISBN 9788131754498.
* Mehrotra, Nitin (2005). Business Process Outsourcing -- The Indian Experience. ICFAI books. ISBN 978-81-7881-576-3.
* Sornarajah, Muthucumaraswamy; Wang, Jiangyu (2010). China, India and the International Economic Order. Cambridge University Press. ISBN 978-0-521-11057-0.
* Varadarajan, Latha (2010). The Domestic Abroad: Diasporas in International Relations. Oxford University Press. ISBN 978-0-19-988987-7.